What type of document typically initiates a real estate transaction?

The purchase agreement is the document that typically initiates a real estate transaction as it outlines the terms and conditions under which the buyer agrees to purchase the property from the seller. This legally binding agreement specifies key details such as the purchase price, the closing date, contingencies, and any other pertinent terms that the parties must adhere to. The execution of the purchase agreement marks the formal start of the transaction process and sets the stage for the subsequent steps, including inspections, financing, and the closing itself.

In contrast, while a title deed is an essential document that confirms ownership of the property, it is typically prepared and executed later, after the purchase agreement has been signed and the transaction is moving toward closing. Escrow instructions come into play after the purchase agreement, detailing how funds and documents are to be handled during the escrow period. Similarly, a loan application is part of the financing phase and does not initiate the real estate transaction; rather, it is submitted by the buyer to secure funding for the purchase. Hence, the purchase agreement is the first critical step in initiating the transaction.